Kyrgyz Prime Minister Babanov Visited Kumtor Mine – and me too!

In July 2012, Centerra Gold hosted a visit by Kyrgyz Prime Minister Babanov, parliamentarians, experts and media to the Kumtor mine. This followed a Governmental decree issued a day earlier which cancelled a prior decree granting Kumtor certain surface rights in relation to the project.In operation since 1997 Kumtor last year represented over 10% of Kyrgyzstan’s GDP and as much as 60% of its industrial output. Kyrgyzstan owns 33% of Toronto-listed Centerra Gold, Kumtor's parent company.

Centerra’s press release highlights the Prime Minister’s confirmation of the Government’s position that the cancellation of the prior decree would have no impact on or limit in any way Kumtor’s activities or operations. However, a number of concerns were effectively showcased to the media by the Prime Minister during his site visit. Some of these have been haunting Kumtor at least since a first Intergovernmental Commission was established in mid-2011 to review Kumtor’s environmental performance (see also my blogs: Assessment of Kyrgyz Commission Review of Kumtor Mine Published  and Creating Paper Parks or Biodiversity Value in Kyrgyzstan?).

During his site visit, the Kyrgyz Prime Minister Babanov noted that Kumtor’s operation is not better than other Kyrgyz mining operations.  For the public and even experts in the field, it may be more difficult to objectively benchmark Kumtor’s performance against its local peers. This is not just a question of scale of Kumtor and its corresponding positive impact on the country’s economy (which has always placed Kumtor in the political limelight). It is also due to apparent lack of transparent reporting within the Kyrgyz mining sector. According to the United Nations Economic Commision for Europe (UNECE), which published the Second Review about Kyrgyzstan in 2009 (see here or donwload here: UNECE Second Environmental Performance Review of Kyrgyztsan, 2009 - ca. 2 MB),

Only one company in Kyrgyzstan, Kumtor Operating Company, publishes a (voluntary) annual environmental report.

This lack of information hampers real benchmarking regardless of nationality of shareholders and operators.

Kumtor was initially reviewed and co-financed and supported by the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the Export Development Canada (EDC) and the Multilateral Investment Guarantee Agency (MIGA). The project was and continues to be subject to extensive approval, permitting and monitoring processes. As a result, Kumtor has been disclosing detailed Annual Environmental Reports (AER) for many years. These are dispatched, amongst others, to a variety of schools and libraries in the wider project area. Kumtor’s 2010 Annual Environmental Report is also web-posted here and the 2011 report is expected to be released shortly. This means that Kumtor could be readily benchmarked if similar reports could be identified for its local peers.

Kumtor is also subject to some 30 annual inspections and audits by local authorities and international consultant. As a result of one such external audit, Kumtor's cyanide transport within Kyrgyzstan was recently certified as compliant with the International Cyanide Management Code. This means that Kumtor’s operational practices relating to its cyanide transport meets best international practice. However, as became also evident during the Prime Minister Babanov’s visit, there is always room for further improvement. Fact-based scientific studies and benchmarking can help drive this process.

The one benchmarking-type process in the Kyrgyz Republic that I am aware of relates to revenue payments by the extractive sector (see also Kyrgyz Extractive Industry Transparency Initiative or K-EITI). This initiative involves cross-sectoral stakeholders and has also been supported by Kumtor/Centerra. But K-EITI does not deal with the environmental performance of the extractive sector in Kyrgyzstan.

Are you aware of any benchmarking of environmental and social company policies, practices, performance and public reporting of extractive/mining companies in Kyrgyzstan? Or would this provide some interesting research topics for students/academia in the field of law, engineering, business administration, social and environmental sciences?

See also related news article:

Centerra to work with Kyrgyz government on Kumtor issues (Reuters)

Gold mine roils politics in Kyrgyzstan (Washington Times)


About the author: Mr. Mehrdad Nazari has over 20 years of professional experience in EHSC auditing, ESIA and CSR. He has served as an Expert Witness on environmental and social aspect of mining on an international arbitration case involving Venezuela which is currently before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). Mehrdad was also an Expert Panel Member advising the Compliance/Advisor Ombudsman (CAO) office of the IFC on a case involving an oil project in Kazakhstan. Previously, Mehrdad served as a Principal Environmental Specialist at the European Bank (EBRD, until 2003), conducting environmental and social appraisal, and monitoring investment projects. This included also the Kumtor operation. Mehrdad was also Head of CSR Research at CoreRatings, London (formerly part of Fitch, now DNV), which provided subscription and engagement services to asset managers and pension funds; and Project Manager with Dames & Moore (now URS), a leading environmental and engineering consulting firm.  Mr. Nazari obtained his academic training in Germany, the UK and the USA (Fulbright grantee), focusing on geosciences, business administration, and sustainable development. He holds an undergraduate degree in Mineralogy (geochemistry) from JW Goethe University in Frankfurt, Germany; a Masters degree in Hydrogeology from University of Birmingham, UK; and an MBA degree from Henley Business School in the UK. He is also a Fellow of Rockefeller Foundation’s Leadership for Environment & Development (LEAD) program, a licensed Sustainability Reporting Assurance Provider, a member of the International Association for Impact Assessment, and assists organizations with their stakeholder engagement and sustainability reporting.